December 2025 was a challenging month for markets, with weaker liquidity and a more defensive tone across risk assets. This was reflected in fund outcomes, with the Digital Fund returning -6.29% for the month and Alpha Prime Trust returning -0.25%. Trading conditions were uneven, with brief rallies followed by pullbacks, and investors generally favouring more liquid exposures as the month progressed.
The US Federal Reserve delivered another quarter point cut in December, taking the target range to 3.50% from 3.75%, but the accompanying messaging signalled a more cautious approach ahead. That shift contributed to more frequent changes in market direction across asset classes, and it weighed on sentiment in crypto as well. Major crypto assets saw renewed drawdowns during the month as investors responded to softer confidence around growth and periodic moves toward safer positioning. Crypto fund flows remained a headwind late in the month, with CoinShares reporting notable weekly outflows from digital asset investment products, including outflows from Bitcoin and Ethereum exposures.
By contrast, gold and silver were notably strong in December, reflecting a preference for assets viewed as more defensive during periods of uncertainty. The World Gold Council noted gold rose about 4% over December, helped by a weaker US dollar and ongoing investor demand. Silver also pushed to fresh highs late in the month, with Reuters reporting a sharp jump on 26 December to a new record, supported by strong investment demand alongside a tight physical market and industrial demand.
Alpha Prime Trust
Alpha Prime Trust recorded a small drawdown for the month, as markets were unsettled and trading conditions were inconsistent. December featured short rallies followed by quick pullbacks, which made it difficult for positions to build momentum. There was also a noticeable preference for liquidity into year end, so price moves were often sharper than usual and conviction was limited.
Within the sleeves, the DeFi sleeve (+0.41%) was supported by steady protocol activity and income style opportunities that can remain available even when token prices are mixed. Volatility Arbitrage (+0.09%) benefited from brief periods of larger price swings, where option pricing can temporarily become more favourable. Momentum Forex (-2.70%) was the main detractor caused by the strong surge of silver prices, which is a tough environment for trend-based positioning. Market Neutral (-0.01%) was broadly flat as many markets moved together and liquidity was uneven, reducing the number of clean opportunities.
Digital Fund
Digital Fund returned -6.29% as risk appetite faded through the month and investors reduced exposure in more volatile parts of the crypto market. In these conditions, smaller coins often fall further than the majors because it takes less selling to move prices, and rebounds can be short lived when buyers step back.
Within the portfolio, Maker rose 11.26% to US$1,492.66, helped by continued interest in established DeFi protocols and ongoing attention around the Maker ecosystem’s transition to Sky, which supported sentiment late in the month. Monero rose 6.99% to US$438.11, consistent with periods when privacy focused assets see intermittent demand as investors become more selective. These gains were offset by sharp declines in Cardano (-19.15% to US$0.3419) and Hedera (-24.59% to US$0.26804), which reflected broad selling pressure in higher volatility coins and a lack of supportive near term catalysts during a month when investors were focused on reducing risk.